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PRE DEPARTMENTAL EXAMINATION

(COVERING WEEK 1 to 5 Topics)
Note: Indicate the letter of your choice on electronic answer sheet provided.
WARNING: Avoid erasures since it is tantamount to a wrong answer.
1. Shendelzare Silkwood, an American management expert is hired by a Philippine Corporation to assist in its organization and
operation for which he has to stay in the Philippines for 5 months. He came to the Philippines for this definite purpose but the
nature of his job may require him to extend his stay and live temporarily in the Philippines. The American management expert
intends to leave the Philippines as soon as his job is done.
For income tax purposes, the American management expert shall be classified as:
a.RA b.NRAETB c.NRANETB d.NRC
2. Which of the following shall not be subject to income tax under section 24(a) on their income from Philippine sources?
a.Individual citizen of the Philippines residing therein
b.Individual citizen of the Philippines residing outside the Philippines including the overseas contract workers
c.Individual alien who is a resident of the Philippines
d.Individual alien who is not a resident of the Philippines
3. Enrique Requiestas, resident citizen, widower, with a dependent minor brother, had the following data on income and
expenses.
Gross business income P 500,000
Business expenses 200,000
Interest from savings deposit, BPI-Makati, Philippines 50,000
Prize in a literary contest he joined 100,000
Prize received for achievement in literature (did not join the contest) 10,000
Gain from sale of bonds (maturity is 6 years) 5,000
Cash he inherited from his uncle 300,000
Winnings from illegal gambling 20,000
Compute the total final tax from certain income.
a.P34,000 b. P36,000 c. P32,000 d. P108,000
4. The system of tax compliance wherein the employees does not have to make computations nor file an income tax return at the
end of the year
a.Final withholding tax scheme c. Substituted Filing of Tax Returns
b.Creditable withholding tax scheme d. Self-Assessment Method
5. Which is subject to final withholding taxes?
a.Interest on loans of by banks c. Dividends from foreign corporations
b.Prizes from abroad d. Book royalties
6. Mr. Jopel Eman entered his short story in a literary contest. He won in the Short Story Category, and received P500,000 for his
prize. What was the tax consequence of the literary prize?
a. Exempt from tax c. Subject to Section 24 (a)
b. Subject to final withholding tax d. Not subject to any internal revenue tax
7. Mr. Christopher Miranda earned the following prizes from two different competitions:
Date Event Gross Prize
January 4, 2011 Dancing competition P 12,000
February 14, 2011 Modeling competition 10,000
Compute the total final tax that should have been withheld from the above prizes.
a.P5,500 c. P3,000
b.P4,400 d. P2,400
For items 8-9
Kyrie Prince Irving has the following items of income:
Philippines Abroad
Business income P 200,000 P 100,000
Professional fees 100,000 50,000
Compensation income 400,000 -
Rent income 300,000 200,000
Interest income-bank 20,000 30,000
Royalty 30,000 10,000
Lotto Winnings 100,000 50,000
8. Assuming Kyrie Prince Irving is a resident citizen, compute the total income subject to Philippine income tax.
a.P1120,000 c. P1,250,000
b.P1,100,000 d. P1,590,000
9. Assuming Kyrie Prince Irving is a resident alien, compute the total income subject to Philippine income tax.
a.P1,120,000 c. P1,250,000
b.P1,100,000 d. P1,590,000 Commented [JDA1]: No answer
10. Which of the following is not a return of profits?
a)Proceeds of crop insurance
b)Guarantee payments
c)Insurance received as a result of death of a person
d) Indemnity received from patent infringement suit
11. Mr. Santiago purchased a life annuity for P100,000 which will pay him P10,000 a year. The life expectancy of Mr. Santiago is 12
years. Which of the following will Mr. Santiago be able to exclude from his gross income?
a. P100,000. c. P20,000.
b. P10,000. d. Answer not given.
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12. Separate taxpayer’s identification number (TIN) is required for which of the following?
a. A parent and a subsidiary corporation c. A sole proprietorship and its owner
b. The home office and the branch of a corporation d. All of these
13. A final or annual return is filed on or before the 15th day of the?
A. Month following the close of the taxable year C. 3rd month following the close of the taxable year.
B. 2nd month following the close of the taxable year. D. 4th month following the close of the taxable year
14. Special assessment is an enforced proportional contribution from owners of land especially benefited by public improvement.
Which one of the following is not considered as one of its characteristics?
A. It is levied on land.
B. It is based on the government’s need of money to support its legitimate objectives.
C. It is not a personal liability of the persons assessed.
D. It is based solely on the benefit derived by the owners of the land.
15. As a rule, the following are taxable income, except
A. Cash dividend C. Scrip dividend
B. Property dividend D. Stock dividend
16. Which agency, office or bureau issues revenue regulations?
a. Congress c. Office of the Commissioner of Internal Revenue
b. Department of Finance d. Revenue District Office
17. Lago Corporation changed its accounting period from a calendar year to a fiscal year ending every March 31. Lago Corporation
should file its annual income tax return not late than
a. April 15 c. June 15
b. August 15 d. July 15
18. The constitutional exemption of religious or charitable institution refers only to:
a. real property tax c. real property tax and income tax
b. income tax d. business tax
19. The constitutional requirement for non-provision of any tax-exempt legislation without the concurrence of the majority of all the
members of Congress is intended to prevent:
a. legislation of burdensome or oppressive tax laws
b. to ensure that the government will no incur a deficit
c. ensure approval of all tax bills prior to becoming tax laws
d. unethical lobbying in the lawmaking body
20. Mr. Vidalsky, is a professional practitioner as a management adviser. In addition, he held various properties and currently
engaged in diverse business operations. As a result, he has P1,895.00 in personal tax aside from his basic tax of P5.00. If Mr.
Vidalsky intentionally disregard to pay his total personal tax, which of the following is correct?
a. Mr. Vidalsky can be imprisoned for non-payment of the P5.00 personal tax.
b. Mr. Vidalsky cannot be imprisoned for non-payment of the personal tax because he is a professional wherein his imprisonment
could cause economic loss to the country.
c. If Mr. Vidalsky pays only the P5.00 personal tax, he cannot be imprisoned.
d. Non-payment of the additional tax could cause imprisonment.
21. This refer to the privilege or immunity from a tax burden of which others are subjected to:
a. Exclusion c. tax holiday
b. Deduction d. reciprocity
22. Benjie “Lolito” Sia is an amateur boxer. He is sent to compete in France by the Amateur Boxing Association of the Philippines
(ABAP) and wins the gold medal after beating his opponent Eduardo “Smooth” Suave. He is awarded P500,000 by DLSAU Corp.,
a domestic Philippine Corporation. What is the tax consequence of the award received by Sia?
a. Subject to section 24 (a) c. Not subject to income tax
b. Subject to final tax d. Subject to amusement tax
23. Jake is indebted to Richard. Due to his inability to pay the debt, he was asked to clean the piggery of the latter for three months.
Thereafter, Jake gave him P5,000 cash and condoned the debt amounting to P10,000.
How much income should be declared by Jake?
a. 5,000 b. 10,000 c. 15,000 d. None Commented [JDA2]: Bonus
24. Which of the following does not have a BIR Zonal value?
a. Building improvements c. Condominium unit
b. Agricultural land d. Condominium parking space
25. Basic Principles of a sound tax system, except
A. Fiscal adequacy C. Administrative feasibility
B. Equality or theoretical justice D. Intellectual sensitivity
For items 26-28
Theresita Guadalupe insured his life with an insurance company. Under the contract, she will pay a monthly premium of P2,000 for
10 years. In case of death before the 10th year, his beneficiary will receive an indemnification in the amount of P150,000. If he is
still living on the 10th year, he will receive the face value of P500,000.
26. If Theresita Guadalupe dies on the 5th year, his beneficiary will report an income of:
a. P500,000 b. 150,000 c. 260,000 d. Exempt
27. Suppose Theresita Guadalupe, dies on the 5th year and his beneficiary was offered to receive the P150,000 in lump sum or to
receive it at P20,000 a month for ten (10) months and the beneficiary chose the 2nd option, she will report an income of
a. 500,000 b. 150,000 c. 50,000 d. Exempt
28. Suppose Theresita Guadalupe survived the policy and was able to receive P500,000, she will report an income of
a. 500,000 b. 260,000 c. 150,000 d. None
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29. Tax which imposes a specific sum by the head or number or by some standard of weight or measurement and which requires
no assessment other than a listing or classification of the objects to be taxed.
A. Specific C. Excise
B. Ad-valorem D. Income
30. Taxation includes the power to destroy.
A. Holmes Dictum B. Lifeblood Dictum C. Marshall Dictum D. Vidal Dictum
31. Taxation is not the power to destroy while the court sits.
A. Holmes Dictum B. Marshall Dictum C. Lifeblood Dictum D. Vidal Dictum
32. The law may be harsh but a law is still a law.
A. Dura lex sed lex C. Res ipsa loquitur
B. Ignorantia juris non excusat D. Res judicata
33. This law is also known as the Persons with Disability law which governs that a dependent relative within fourth degree of
consanguinity is eligible for the basis of claiming an additional personal exemption amounting to P25,000.
A. R.A 9416 B. R.A 10754 C. R.A 1767 D. R.A 1234
34. . Withholding taxes are the primary liability/responsibility of the
a. Earner or payee of income c. Payee and payor of income
b. Payor of income d. Collecting agency of the government
35. Mr. Alex Estrella is a seaman employed abroad in an international vessel that operates exclusively in international transport
operations. Alex invested all his earnings abroad in the time deposits of the Bank of the Philippine Islands with an exception to
the $50,000 he invested it in a foreign bank. A summary of his investments follows:
P5,000,000 6-year non-preterminable deposit 10% p.a.
P3,000,000, 3 year deposit 7.5% p.a.
$100,000, 5 year preterminable deposit 10% p.a.
$50,000, 2 year deposit 8% p.a.
The applicable conversion rate is P47:$1.
Compute Alex annual final tax.
a. P 94,350 c. P 45,000
b. P 59,100 d. P 16,875
36. Bea Binene won a gold medal and P50,000 cash prize for swimming competition in the Palarong Pambansa. How much final
tax should be withheld from the prize?
a. P 20,000 c. P5,000
b. P 10,000 d. P 0
37. Cleveland Champions Company insured the life of its president for P2,000,000. A total of P500,000 in premiums was paid
before the president died. The company collected the total proceeds.
Compute the return on capital.
a. P2,000,000 c. P500,000
b. P1,500,000 d. P 0
38. A Japanese who is staying in the Philippines for183 days is a
a.Resident alien c.Non-resident alien engaged in trade or business
.
b.Non-resident alien d.Non-resident alien not engaged in trade or business
39. Which is not an income taxpayer?
a. Non-resident foreign corporation
b. Non-resident alien not engaged in trade or business
c. Joint venture engaged in energy operation in pursuant to a service contract with the government
d. Irrevocable trusts
40. Which passive income is subject to regular tax?
a. Dividend income from resident corporation c. Royalties from musical composition
b. P10,000 winnings d. Interest on Peso bank deposit
41. Short accounting period will not exist for tax purposes for which of the following?
a. Death of the taxpayer
b. Dissolution of business during the year
c. Termination of the accounting period of the taxpayer by the Commissioner of Internal Revenue
d. Change in address of business establishment of the taxpayer
42. Income tax returns should not be filed in which of the following
a. Authorized agent bank c. Bureau of Customs
b. Collection agent d. Revenue district officer
43. Which of the following is subject to regular income tax?
a. Gain on redemption of shares in mutual funds
b. Gains on sale of long-term bonds with maturity of more than 5 years
c. Sale of foreign stocks directly to buyer
d. Compensation for personal injuries or sickness
44. You have been hired as a Chief Accounting Officer of a Publicly listed entity. What is the most usual and suitable dress code
for such position that we will be strictly employed by that entity
a. Short pants, black shoes and a long sleeve with a matching jeje cap.
b. A black suit matched with a formal pants, a necktie and a formal shoe.
c. A khaki short, sando, flashy necklace with chains and a skin tattoo.
d. A formal suit, slippers, long/short sleeve with necktie.
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45. Income tax may be imposed for the following purposes, except
a. To provide large amounts of revenues
b. To limit corruption
c. To offset regressive sales and consumption taxes
d. To mitigate the evils arising from the inequalities in the distribution of income and wealth
46. The following winnings are exempt from tax, except one, which is the exception?
a. Lotto winnings c. Jueteng winnings
b. PCSO winnings d. All of these
47. SPV, Inc. is due to pay the following expenses:
Interest expense – bank loans P21,000
Royalty expense – from franchisor 40,000
Rent expense – for lease of office building 10,000
Salaries expense – for employees 100,000
Dividends to shareholders 40,000
Which of the following is subject to final withholding tax?
a. None c. Salaries
b. Interest d. Royalties
48. Compute the final tax to be withheld by SPV.
a. P 0 c. P12,000
b. P 4,000 d. P8,000
49. Which is not a tax obligation of an individual taxpayer engaged in business?
a. File and pay monthly business tax
b. File and pay monthly income tax
c. File and pay annual income tax
d.Withhold and remit any withholding tax on income payments
50. Effective July 2, 2014, John Hay Company changed its fiscal year ending every March 31 to another fiscal year ending every
August 31. An adjustment return shall be filed covering the period
a. July 3 to August 31, 2014. c. April 1 to July 2, 2014.
b. April 1 to August 31, 2014. d. April 1 to July 1, 2014.
51. The winnings of a resident alien from abroad is
a. not subject to Philippine income tax. c. subject to final tax.
b. subject to regular tax. d. subject to either final or regular tax.
52. Who are required to file quarterly declaration of income?
a. Individuals engaged in business c. Corporations
b. Corporations and individuals engaged in business d. All individuals and corporations
53. 1st statement- PCSO and Phil lotto winnings are excluded from gross income because they are subject to
final tax.
2nd Statement - Prizes, awards and winnings are excluded from gross income because they are subject to
final tax.
A. Both are true C. True; False
B. Both are False D. False; True
54. The Income tax return for the calendar year 2010 was due for filing on April 15, 2011, but the taxpayer voluntarily filed his tax
return without notice from the BIR, only on July 15, 2011. The tax due per return amounts to P100,000. The total amount due
on July 15, 2011 (excluding compromise penalty) is
A. P145,000 C. P117,500
B. P111,250 D. P130,000
55. Using the preceding number, but the income tax return is filed on time but through an internal revenue officer other than with
whom the return is required to be filed. The total amount due is (excluding interet and surcharge)
A. P100,000 C. P150,000
B. P130,000 D. P125,000
56. The individual income tax return of a fixed earner (employee) is filed on or before
A. April 15 of the current taxable year C. May 15 of the current taxable year
B. April 15 of the following taxable year. D. May 15 of the following taxable year.
For items number 57-59
James Reid,a resident of Constellation Makati City owns a personal car which he sold in installment on November 1, 2014 as
follows:
Date of acquisition March 30,2012
Acquisition cost P300,000
Terms of payment
Downpayment November 1,2014 P50,000
Due on December 1,2014 50,000
Due on January 1, 2015 150,000
Due on February 1, 2015 150,000
57. The initial payment in 2014 is
a. P50,000 b. P100,000 c. P300,000 d. P400,000
58. The amount of gain to be reported in 2014 is
a. 50,000 b. 25,000 c. 37,500 d. 12,500
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59. The amount of gain to be reported in 2015 is

a. 50,000 b. 25,000 c. 37,500 d. 75,000
60. Assuming James does not sold the car in installment and does not opt to installment basis method. How much is the amount
to be reported as gain in 2014?
a. 100,000 b. 50,000 c. 37,500 d. 25,000
61. Which of the following statements is not correct?
a. Creditable withholding tax may refer to withholding tax on compensation or to withholding or business tax
b. The withholding tax on business may refer either to VAT or to percentage tax
c. Withholding tax on compensation may also refer to expanded withholding tax
d. Creditable withholding tax is the other term for final withholding tax
62. Deadline of remittance for the withholding tax on compensation income is on or before?
a. 10th day of the following month c. 15th day of the following year
b. 10th day of the following quarter d. 15th day of the following month
63. Withholding taxes through value added tax is filed using BIR FORM ____
a. 2551 b. 2301 c. 1601-V d. 2550
64. Refer to number 63, the deadline of the form stated in number 63 is on or before
a. 10th day of the following month c. 20th day of the following month
b. 15th day of the following month d. 25th day of the following month
65. No person shall be imprisoned for debt or non-payment of tax. This is a(an)
A. Inherent limitation C. International limitation
B. Constitutional limitation D. None of the above
66. My Grandfather never learned to use a calculator, as he shops he can accurately compute his grocery bill in his head to
within a peso.
a. as he shops c. but as he shops
b. while shopping d. therefore, when shopping
67. Tax which is demanded from the person whom the law intends or desires to pay it.
A. Direct C. Excise
B. Indirect D. Percentage
68. Which of the following statements is not correct?
A. An inherent limitation of taxation may be disregarded by the application of a constitutional limitation.
B. Income tax liabilities shall be paid by the inhabitants even if foreign invaders occupy our country.
C. Taxes may be imposed retroactively by law, but unless so expressed by such law, these taxes must only be imposed
prospectively.
D. Tax laws are either political or penal in nature.
69. I. Tax is a demand of sovereignty.
II. Toll is a demand of sovereignty.
A. True; True C. False; true
B. True; false D. False; false
70. I Tax is imposed on persons, property, and property rights.
II. Special assessment is imposed on persons, property, and property rights.
A. True; True C. False; true
B. True; false D. False; false

The eyes of the LORD watch over those who do right and his ears are open to their prayers.
1 Peter 3:12